According to data released by the Federal Deposit Insurance Corporation, single-family construction lending experienced a slight decline in the second quarter.
From the first quarter, the volume of outstanding loans for residential construction and land development for 1-4 family residences decreased by 0.4%.
For the first time in nine quarters, the aggregate volume of outstanding AD&C loans, which encompasses both residential and nonresidential construction loans, increased.
The total level of outstanding AD&C loans increased to $453.5 billion in the second quarter of 2026, from $453.3 billion in the previous quarter.
In the second quarter, the volume of 1-4 family residential construction and land development loans decreased to $91.3 billion, a 0.4% decrease from the previous quarter.
The volume of 1-4 family residential properties increased by 1.7% from the previous year, despite the quarterly decline.
This was the fourth consecutive quarter in which there was a year-over-year increase.
The volume of all other real estate development loans increased to $362.1 billion, a 0.1% increase from the first quarter but a 4.6% decrease from a year ago.
It is important to acknowledge that the FDIC data is an imperfect data source, as it only represents the stock of loans and does not account for changes in the underlying flows.
However, lending continues to be significantly diminished in comparison to previous years.
The current amount of existing 1-4 family residential AD&C loans is 56% lower than the peak level of residential construction lending, which was $204 billion during the first quarter of 2008.
In recent years, this capital market has been supplemented by alternative sources of financing, such as equity partners.
Construction Loan Quality Metric
In the second quarter, the number of loans that were 30 days or more past due or in nonaccrual status decreased to $967.8 million.
This represents 1.1% of the total volume of 1-4 family residential construction loans.
The volume of loans in nonaccrual status was $492.2 million, while the level of loans 30-89 days past due was $425.9 million.
The 30-89 past due volume decreased from $451.5 million, while the nonaccrual loan volume decreased from $493.7 million in the first quarter.
Loans are classified as nonaccrual if one or more of the following conditions are met: the loan is 90 days or more past due on principal or interest (unless it is well-secured and in the process of collection), the bank no longer anticipates full repayment of principal and interest, or the borrower’s financial condition has significantly deteriorated, qualifying for cash-basis accounting.
[Read more about this topic on eyeonhousing.org]